"The state is the great fiction through which everyone endeavors to live at the expense of everyone else" - Frédéric Bastiat

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This is a new blog dedicated to addressing issues and ideas from the perspective of freedom, natural rights and non-aggression.

Thursday, March 14, 2013

Income Tax, Slavery and Self-Ownership

Taxation is a policy of the state that it widely accepted as morally just and a necessary element of a stable and functioning society. Slavery is fortunately now condemned and rejected as an immoral practice, antithetical to individual liberty, and unwelcome in a free society. However, as the saying goes, bad habits die hard, and slavery is one of humanity’s worst habits, prominent for a prevailing portion of human history. In comparison, it may seem like these concepts couldn’t be any more different, like comparing good and evil, or savagery and sophistication. Yet, contrary to what may be common perception, the taxation of personal income and earnings is fundamentally akin to slavery, both being logically and morally justified under the same principles. Therefore, the taxing of income, objectively compared to the institution of slavery, should be found morally abhorrent and incongruent with human freedom in the same ways.

Firstly, it must be understood precisely how the taxation of income is grounded on the same foundations as slavery. Let us imagine, as an example, that the state taxes your income at 30% of your earnings. This means then, that if you were to work for a total of 100 hours, the state entitles itself to 30 hours of your labor. Therefore, you are working for 30 hours without compensation. If you were in need of 70$, you would first need to work 30 hours unpaid for the state before you reach the desired amount of earnings that your labor bears. This equates to what could be called proportional slavery, in which a portion of an individual’s labor is owned by another, just as an absolute slave would have their labor owned completely by another.

Although it is clear that as an individual, proportional slavery is favorable to absolute slavery, just as assault is favorable to murder, that does not diminish the fact that they are inseparably based on the same principle. Murder violates the rights of the victim to a greater degree than assault, yet both are unjust (and illegal). Absolute slavery violates the slave’s right to self-ownership to a greater degree than the proportional slavery of the income tax, yet it is unclear how one could be claimed as unjust while the other as not, unless it were to be claimed in conjunction that injustice only exists when the principle that validates its identification as so is executed at a certain magnitude.

This claim would raise the question, would it be more unjust to enslave one-hundred people at 30% of their labor or one person at 100%? In this case, the magnitude of the injustice to one-hundred people is far greater (approximately 30 times greater) than to that of the one-person, making the injustice of his isolated slavery more acceptable in terms of its universal degree of effect. Yet, in the situation of isolated slavery, the distribution of injustice is much less fair. Where does magnitude of injustice meet distribution of injustice? And more importantly, who is to decide this? It is not difficult to imagine, given the endorsement of a quantitatively based acceptance of injustice, that the other ninety-nine people in this circumstance, having the majority, would be more inclined to enslave one person completely rather than have themselves enslaved at a level of 30%, as well as feeling a greater sense of moral justification knowing, or at least perceiving that a greater injustice had been averted. When people come to see unjust acts in this manner, certain minorities will always be the first to reap the negative impact of the injustice that will follow. In fact, it would be quite possible to argue that this mentality has been used to justify slavery in several instances in the past, if not all.

Some may argue outright that the taxation of income is not akin to slavery because it does not claim entitlement to the entirety of the taxed individual’s labor. To refute this objection, one might imagine a slave master allowing “his” slaves to keep one-percent of the cotton that they picked to use or sell. Are these people then not to be identified as slaves since they are being allowed to keep a certain percentage of the fruits of their labor? It is hard to imagine anyone trying to defend this position. Yet, if the objector concedes that these people are still slaves, then at what percentage of earnings that an individual is allowed to keep do they lose their identification as a slave? They key word in the question that has just been posed is allowed. The principle by which an individual is allowed to keep a certain portion of the earnings that their own labor produces is what defines slavery and negates the principle of self-ownership and personal liberty. Just as the fact that the master decides how much, if any, of the fruits produced by the labor of “his” slaves that they are allowed to keep individually gives this practice the classification of slavery, the state as well, deciding how much a citizen is allowed to keep should entail the same classification, as it puts forth the idea that the labor of the people in a society belongs to the state, which allows them to keep a certain amount only after it takes what it rightfully owns. Ownership entails property, and holding an individual’s labor as property is precisely the way in which we define slavery. Just because the state only holds a share in that property rather than the whole thing does not negate the principle of exterior ownership.

Further refutation of the parallels of slavery and income taxes may concede the corresponding immorality of the two yet argue in favor of the taxation of income from what may be called the “get what you pay for” argument. If everyone pays into the system at certain rate, or is enslaved at a certain proportion as we now understand it, the state, in all its benevolence, will be able to reallocate the wealth that it consumes in a way so that those who pay into it receive a net gain from the services that the state provides – a sort of generator of wealth for all. For the purpose of focusing on the original proposition, let us assume for now that the state spends people’s money more effectively than they do, that those with lower incomes are able to influence the state in an equally beneficial degree to those with higher incomes, and that those individuals that run the state possess some profound blend of divine altruism and omnipotent intellect. Even so, these wildly exaggerated presumptions do not make a relevant refutation of the claim that slavery and the taxation of income are based on the same principles. Even if we concede for the sake of argument that someone would be able to benefit another by forcing them to do something different than what they were planning to do on their own accord, that superior knowledge does not mean that by forcing them to comply with their commands that that person would be making their own choice. It is conceivable to think that someone could coercively enslave someone to one hour of easy labor everyday, well housing them in their own personal mansion and treating them to whatever desires they wished so long as they completed their one daily hour of easy labor. It is not the conditions of slavery which entails it to that label but rather the deprivation of choice regarding the usage and production of one’s labor that is antithetical to self-ownership. An American slave owner in the 1800’s could have very well housed and fed one of his slaves at a standard higher than what wealth their labor produced for him, yet that imbalance of wealth would not negate their identification as a slave.

It is common for an employer to only hire an employee if they think that that employee will generate more wealth for them than it will take to employ them, yet it is the fact that the employee can choose whether or not to work for that employer that keeps them from being identified as a slave. A worker can choose to leave if they wish whereas a slave cannot – that is what separates the two forms of labor. Unlike previous historical forms of absolute slavery, someone paying a tax on their income has the choice to decide where they work, but they cannot escape the proportional slavery being imposed by the state. A runaway slave, be they absolute or proportional, cannot be construed as to have found freedom with the slave master following him everywhere he goes. Only once the slave master’s dominion over the labor has been severed entirely can someone truly be considered a free individual.

A similar position to this may not suggest that everyone benefits from the taxation of income, but from a more utilitarian standpoint, it may be argued that this proportional slavery can be beneficial to society as a whole. Having a tax on income, they might say, allows for state to appropriate the wealth of its citizens in a manner that will bring about greater prosperity to the population as a whole. By taking from some and giving to another, someone else might be benefiting at the expense of another in a way that proportionally brings greater standards of living to society as a whole. It is not hard to conceive of a white person in the early 19th century United States justifying their form of slavery in a similar way, saying that because they were enslaving black people, they were able to live better-off – that the majority was able to benefit at the expense of the minority. If by some hypothetical assessment we were able to determine that enslaving (absolutely) a minority in the population would make the standard of living within that population higher, would that in turn make it just? If not, then would partially enslaving parts of the population to reach the same goal be any more just? Or even partially enslaving the entire population? Unless someone is purposely seeking to maintain the existence of the principle of slavery in our society, why would someone argue that we should allocate slavery equally instead of abolishing it completely?

The answer to this may lie in what is perhaps the most substantive conclusion on this matter that still maintains a relatively favorable perspective on the taxation of income: that slavery is a necessary condition of humanity. This claim certainly holds some water, for even the most well-read historian would be hard pressed to pinpoint a period in civilized history in which slavery was non-existent. Even the United States, after finally abolishing outright slavery with the 13th amendment in 1865, could barely make it half a century before instituting the income tax permanently in 1913 and effectively reinstating slavery on a proportional level. This time, a minority was not enslaved absolutely to serve the majority; instead the slavery was distributed among the whole population. As has been illustrated however, dispersing slavery among the many may, technically speaking, be a step towards equality, but one would think that equality of enslavement is not the goal that our society should be pursuing, unless of course, these bleak claims of the essential coexistence of humanity and slavery are in fact accurate.

However, this connection may not be entirely true. Although we have conceived hypotheticals that contradict this principle, we have learned through economic studies and history that slavery is an ineffective economic policy because the forced divorcement from self-ownership corresponds with a divorcement from self-incentive. As Ludwig von Mises explains:

If one treats men like cattle, one cannot squeeze out of them more than cattle-like performances. But it then becomes significant that man is physically weaker than oxen and horses, and that feeding and guarding a slave is, in proportion to the performance to be reaped, more expensive than feeding and guarding cattle. When treated as a chattel, man renders a smaller yield per unit of cost expended for current sustenance and guarding than domestic animals. If one asks from an unfree laborer human performances, one must provide him with specifically human inducements. If the employer aims at obtaining products which in quality and quantity excel those whose production can be extorted by the whip, he must interest the toiler in the yield of his contribution. Instead of punishing laziness and sloth, he must reward diligence, skill, and eagerness. But whatever he may try in this respect, he will never obtain from a bonded worker, i.e., a worker who does not reap the full market price of his contribution, a performance equal to that rendered by a freeman, i.e., a man hired on the unhampered labor market. The upper limit beyond which it is impossible to lift the quality and quantity of the products and services rendered by slave and serf labor is far below the standards of free labor. In the production of articles of superior quality an enterprise employing the apparently cheap labor of unfree workers can never stand the competition of enterprises employing free labor. It is this fact that has made all systems of compulsory labor disappear. [1]

Deprived of natural dominion over the products of their labor, a slave possesses far less motivation to utilize their labor in the most productive and efficient ways when doing the bare minimum that it takes to get by will result in the same outcome. Theoretically, the proportional implementation of this principle will have the same effect in accordance with the degree to which individuals are enslaved and withdrawn from their self-ownership and incentives.

People working together for mutual benefit, have proven on the largest of scales to create greater benefits for both parties, as we have seen with the societal advancements that such economic systems have generated in countries like this one. The parasitic relationships of slavery are not mutually dependent with our species. But what is in mutual dependence with slavery is the presence of a slave master – someone who seeks to gain from the parasitic relationship. Throughout all of history there has been one consistent, systemic enabler of slavery in every case of its existence - the state.

Thus, it is evident that such a cynical appraisal of human nature need not be taken to illuminate the roots that slavery has grown and continues to grow upon. Misconstruing slavery as a necessary condition of humanity is totally unwarranted when its actual source is clear. Slavery is a necessary condition of the state. This is why slavery has been instituted through history, this is why it continues to plague supposedly advanced societies with different forms and aliases such as the income tax, and this is why it will likely persist for a long time to come, be it in its current structure or whatever way they choose to disguise it as next.

Maybe, as some might say, these forms of enslavement are just the price we pay for civilization. Maybe we do need rulers and slave masters to guide us in the right direction. But one thing is for sure. It will not do us any good to ignore reality and pretend that the principles we are accepting are anything different than what they are. The taxation of income may not spawn the same imagery of shackles and chains that absolute slavery does, but it violates the exact same principles of self-ownership and the dominion over one’s own labor. With this in mind, it would be hard to envision how any society that abandons these principles could legitimately call itself free.

Is true freedom perhaps, impossible? Could it be the case that we will never fully rid ourselves of all forms of enslavement?

A subscriber to such pessimistic views of human nature must, in turn, reject as incompatible with reality the ethic of justice and freedom that is often claimed as the foundation of our society today. Surely, the perpetual institutionalization of enslavement at any level would make such an ethic unabsolute, dependent on its own contradiction, and ipso facto obsolete. So the question then is this: are we to base society on an ethic that endorses self-ownership and embraces the possibility of human freedom or on the presumption that these ends are unattainable and man is to eternally forgo his liberties for the sake of a civilization which strives not to free man of his chains but reapply them in ever more creative ways?